Tatts Group (TTS)

Tatts Group
has had its share of bad news lately, with shares taking an 18.6 per cent hit this year. The gaming group lost out to chief rival Tabcorp on the Victorian wagering licence in July, worth an estimated $120 million in earnings in the first year of operation. Its wholly owned subsidiary Maxgaming Vic also recently failed to secure its licence to monitor the state’s gaming machines, meaning Tatts involvement with Victorian gaming will end completely for the time being. The company reported a 130.8 per cent rise in net profit over the 2011 financial year, below analyst expectations. But management is positive on growth opportunities, particularly in the company’s Lotteries division. NSW Lotteries is the newest addition to the Tatts stable. At current pricing the stock is looking relatively cheap with a forward price-earnings ratio of 8.4 times and a high 12 month gross dividend yield of 14.6 per cent. Earnings per share is 25¢.